Kazakhstan to subsidize agro-industry

Kazakhstan has promised to release new terms of subsidizing investment projects in agro-industry before May 1 this year, Tengrinews reports citing Kazakhstan's Minister of Agriculture Asylzhan Mamytbekov.

Speaking about ways to stimulate local agricultural industry at the briefing on April 22 he said: "The plan is that before May 1 the government will adopt investment subsidies rules. This is a new mechanism that has not yet been used in our country, but is called for. The idea is to reimburse a part of the expenses that businesses incur during implementation of investment projects.” I.e. part of the invested own or borrowed funds is going to be retuned to the investors at the expense of the state budget. The minister said that this would help reduce production costs and increase competitiveness of Kazakhstan-made goods, cut payback periods on investment projects and improve their feasibility.

On April 14 the Government of Kazakhstan approved one stimulation package: the rules of subsidizing efforts to restore agricultural companies to health. In the first half of this year it is planned to provide 140 billion tenge ($770 million) to second-tier banks for this purpose. "This money will be invested from the “outside” and it is only the interest rate that will be subsidized from the state budget," Mamytbekov said.

According to the minister, one of the key areas in which Kazakhstan’s agribusiness should be developing is agricultural products processing. This should serve to decrease import of food products to Kazakhstan.

Kazakhstan is importing a staggering amount of food even though it has its own agricultural industry in place. According to Senator Kozhakhmet Baimakhanov, 99% of eggs consumed in the country, 92% of flour, 78% of macaroni, 92% of sausages, 72% of pasteurized milk and 96% of cultured milk 96% are imported along with 86% of rice and 96% of salt.

The figures given by the Agriculture Minister paint a much brighter picture, however: "For instance, on the dairy market, we plan to reduce the share of imports to Kazakhstan from 33 percent to 10 percent by 2020. Decline in imports will help stabilize our domestic market and increase production," he concluded.